Judgment

SHAH, J. :- Balkishan Das, Debi Prasad and Jai Ram Das were partners in a trading venture conducted in the name of the Ambala Flour Mills, Amabala. On April 29, 1948, Jai Ram Das commenced an action for dissolution and for account of the partnership business. The Trial Court decreed the suit. In appeal to the District Court, the decree was reversed. On appeal under the Letters Patent from the judgment of a single Judge, the High Court of Punjab by order dated September 26, 1951 restored the decree of the Trial Court and declared that the partnership stood dissolved on April 29, 1948. The High Court observed :

"...... notwithstanding the dissolution of the firm Debi Parshad and Balkishan Das carried on the business of the firm with the property of the firm. On these facts, Jairam Das plaintiff is entitled at the option of himself to such share of the profits made since he ceased to be a partner, as may be attributable to the use of his share of the property of the firm or interest at the rate of six per cent per annum on the amount of his share in the property of the firm."

2. During the pendency of the suit Balkishan Dass severed his 85 connection with the business and the business was carried on thereafter by Debi Parshad alone.

3. In the assessment year 1950-51, Debi Parshad filed three returns of income: (i) on 4-10-50 in the status of a firm (ii) on 14-4-51 in the status of an individual and (iii) on 1-7-51 in the status of firm consisting of Jai Ram Das and Debi Parasad, partners. For the assessment year 1951-52, Debi Parshad filed a return in the status of an unregistered firm. For the assessment year 1952-53 Debi Parshad submitted a return in the status of a Hindu Undivided Family. The Income-tax Officer assessed the Ambala Flour Mills in the three years of assessment in the status of an association of persons." In appeals by Debi Parshad, the Appellate Assistant Commissioner, "annulled the orders of assessment of the assessee in the status of association of persons be set aside and that the cases be remanded to the Income-tax Officer to assess the income as "the income of the family of Debi Parshad." In appeals by Debi Parshad, the Income-tax Appellate Tribunal confirmed the orders of the Appellate Assistant Commissioner annulling the assessments made by the Income-tax Officer and directed that the direction for assessing the income in the hands of Debi Parshad be deleted.

4. The Tribunal referred the following three questions at the instance of the Commissioner of Income-tax.

1."Whether L. Debi Parshad was a stranger in respect of the income-tax proceedings against Ambala Flour Mills?

2. Whether the Appellate Assistant Commissioner could give a direction in the case of Ambala Flour Mills to the effect that the income should be assessed in the hands of L. Debi Parshad after annulling the assessment in the case of Amabala Flour Mills?

3. Whether on the facts and in the circumstances of the case the appeals filed by Shri Debi Parshad were maintainable in law?"

5. The High Court answered the first question in the negative; the second in the affirmative with the rider that the assessment against Debi Parshad "could only be in individual capacity"; and the third question in the affirmative.

6. Debi Parshad was competent to maintain the appeals filed by him to the Tribunal because by the order of the of the Appellate Assistant Commissioner, it was directed that he may be personally assessed by the Income-tax Officer in respect of the income of the Ambala Flour Mills.

7. Counsel for Debi Parshad, however, contended that Debi Parshad was a stranger to the assessment proceeding and the Appellate Assistant Commissioner had no jurisdiction to direct after setting aside the order of assessment that Debi Parshad be assessed personally in respect of the income of the Ambala Flour Mills. The relevant provisions of the income Tax Act may be noticed.

8. The relevant provisions of Section 31 of the Income Tax Act, 1922, are these:

"In dis